'Baldrige Index' Outperforms S&P 500 by Almost 5 to 1

Although you will not find it listed in the financial section of the newspaper, the "Baldrige Index" has once again outperformed the Standard & Poor's 500-this year by 4.8 to 1, one of the highest returns since the Commerce Department'sNational Institute of Standards and Technology started doing the study in 1995.

"Baldrige Award winning organizations build excellence into every aspect of the way they do business and this study shows that is good for business. Customers are delighted, employees are enthusiastic and empowered, and it shows in the bottom line and in all other aspects of their business," said Commerce Secretary William M. Daley.

The "Baldrige Index" is a fictitious stock fund made up of publicly traded U.S. companies that have received the Malcolm Baldrige National Quality Award. NIST "invested" a hypothetical $1,000 in each of the whole company winners--ADAC Laboratories (1996 winner), Eastman Chemical Co. (1993 winner), Federal Express Corp. (1990 winner), Motorola Inc. (1988 winner) and Solectron Corp. (a winner in 1991 and 1997). The investments were tracked from the first business day of the month following the announcement of award recipients through Dec. 1, 1999. Adjustments were made for stock splits. Another $1,000 hypothetically was invested in the S&P 500 for the same time period.

NIST found in this sixth annual study that the group of whole company winners outperformed the S&P 500 by 4.8 to 1, achieving a 1,101 percent return on investment, compared to a 228 percent return for the S&P 500.

NIST also tracked a similar hypothetical investment in a group made up of the whole company winners and the parent companies of 18 subsidiary winners. This group outperformed the S&P 500 by about 3.8 to 1, achieving a 841 percent return on investment, compared to a 222 percent return for the S&P 500.

The Baldrige Award is presented to U.S. organizations in recognition of their achievements in quality and overall performance. The Baldrige Index study is just one measure of the success of companies that receive the Baldrige Award. While receiving a Baldrige Award or any other award is not a guarantee of success, Baldrige Award winners typically show improvements in all aspects of managing their organization, including customer satisfaction and retention, financial and marketplace performance, productivity, product and service quality, and human resource performance and development.

Other studies also have found that organizations receiving quality awards show long-lasting improvements in their bottom-line results. For example, Professors Vinod Singhal of the Georgia Institute of Technology and Kevin Hendricks of the College of William and Mary studied 600 publicly traded firms that have won quality awards. The five-year study showed that, as a whole, these companies had significantly greater improvements than an equivalent control group in the value of their stock, operating income, sales, return on sales, employment and asset growth.

Thousands of U.S. organizations use the criteria to assess and improve their overall performance. But, going through the application process brings additional benefits. For an application fee of $300 to $4,500, depending on organization type and size, organizations will receive from 300 to 1,000 hours of review by at least six experts on the award's private-sector board of examiners. All applicants receive a detailed feedback report on their strengths and opportunities for improvement.

Named after a former Secretary of Commerce, the Malcolm Baldrige National Quality Award and the Baldrige National Quality Program are helping to improve the competitiveness and performance of U.S. businesses and other organizations by promoting performance excellence, recognizing achievements of U.S. organizations and publicizing their successful strategies. The award is not given for specific products or services. Since 1988, 37 companies have received the Baldrige Award. Baldrige Awards are given in manufacturing, service, small business, education and health care.

As a non-regulatory agency of the U.S. Department of Commerce'sTechnology Administration, NIST strengthens the U.S. economy and improves the quality of life by working with industry to develop and apply technology, measurements and standards through four partnerships: the Baldrige National Quality Program, the Measurement and Standards Laboratories, the Advanced Technology Program and the Manufacturing Extension Partnership.

NOTE: For a copy of the Baldrige Index stock study, visit our web site at http://www.nist.gov/public_affairs/releases/stock.htm or send a faxed request to (301) 926-1630.